INVESTOR WARNING – Illegal Broker XTraderFX, GPay, And Money Laundering [Part 2]

XTraderFX illegal brokerage and money laundering scheme

In part 1 of our XTraderFX Report, we covered the activities of the network behind the illegal broker sites XtraderFX, SafeMarkets or OptionStars. The mission of this fraudulent network is to defraud retail investors all over the world. The core of these fraud schemes, which is operated by Israeli Gal BARAK and his team at E&G BULGARIA, is the payment processing system. In addition to the payment services, the constant acquisition of new investors is of outstanding importance for the steady flow of illegal money. For the acquisition of these new investments a considerable part of the money of the existing investors is used. In this respect, the investors finance the big style fraud themselves. Those brokerage fraud schemes are nothing less than worldwide acting criminal organizations.

XTraderFX – A Case In Point

In the case of the illegal broker XtraderFX, the payment services are coordinated by the UK registered company GPay Ltd. According to the records available to us, in 2018 alone over USD 35 million were processed through these illegal broker sites using GPay. GPay, in turn, works with registered Payment Services Providers (PSP) such as Payvision and funnels the money through their system. As a matter of fact, the XTraderFX payment system is a multi-layer scheme with dozens of different shell companies and a variety of registered but KYC/AML-flexible payment services providers.

In addition to PSPs such as Payvision, XTraderFX works with EU shell companies to receive money from EU investors. As explained in part 1 of our XTraderFX Report, customers (traders) were asked to wire their funds to the German real estate and construction company INTELLESTATE BAU which holds a bank account with the German POSTBANK. Consequently, INTELLESTATE BAU transferred the funds to the Marshall Islands company ROCKARAGE LTD which holds an account with the Bulgarian INVESTBANK.

XTraderFX illegal brokerate and money laundering scheme with EU shell companies
XTraderFX via German shell companies and banks

For customer acquisition (lead generation), the operators of XTraderFXGal BARAK, Marina ANDREEVA and their E&G Bulgaria – among others work together with the Israeli Simon TETROASHVILI and his companies ONLINE PROSPECT (Hong Kong) and DYISY GROUP (Israel).

XTraderFX – Just One Of Many

It should be noted at this point that XTraderFX is only one of many illegal broker sites of E&G Bulgaria. Other illegal sites like SafeMarkets or OptionStars follow this pattern with different companies and domains. According to the information available to us, E&G Bulgaria has acquired more than USD 200 million from investors in recent months via these different illegal broker sites.

Customer Acquisition Campaigns

Specialized online marketing companies are commissioned by these illegal broker sites to acquire new customers. They constantly drive new potential customers to these broker sites via so-called “lead campaigns” on Google, Yahoo, Facebook, and other platforms. In return, they receive high commissions. Gal BARAK’s E&G Bulgaria contracted various companies for this customer acquisition. Among these, for example, the Hong Kong-based ONLINE PROSPECT, in which Israeli Simon TETROASHVILI has a stake and acts as director. This Simon TETRASHVILI has also been running his Israeli DYISY GROUP which is specialized to acquire leads for broker sites.

The Hong Kong-based ONLINE PROSPECT is only used as a settlement company. The actual activity will be carried out by the Israeli DYISY GROUP according to the records available to us. The latter is therefore responsible for attracting new investors to the illegal brokerage sites of Gal BARAK and its E&G BULGARIA.

The Gery SHALON Connection?

FinTelegram has received information that the Israeli Gery SHALON is a partner in Simon TETROASHVILI‘s network of enterprises and may actually be a beneficial owner of ONLINE PROSPECT. We confronted Simon TETROASHVILI with this issue but he denied to know Gery SHALON. Unfortunately, he also denied that his ONLINE PROSPECT has any business relationship with Gal BARAK and his schemes which contracts hard facts. Hence, we have to doubt TETROASHVILI’s statements regarding his business.

Moreover, within just a few hours after we presented our respective questions to Simon TETROASHVILI, FinTelegram received another DDOS attack. This may well be a coincidence but given our history with Gery SHALON, we have to doubt that. We have evidence, that the last DDOS attack we received early November 2018 was orchestrated by Gery SHALON and Gal BARAK. We consequently filed criminal complaints with the U.S. authorities back then. This new DDOS attack again pointed toward Gery SHALON who is faced with an indictment in the U.S. for a vast cybercrime enterprise and DDOS attacks.

Boiler Rooms, Retention Management, and the Perpetrator Cycle

XTraderFX perpetration cycle to steal retail investor funds
Retention Cycle or how to get retail investors’ funds

As soon as new clients/customers/traders register with the illegal broker XTraderFX, they are connected to the schemes’ boiler rooms. The so-called account managers in these boiler rooms introduce themselves to the customers immediately after registration via email and telephone. Typically, they use fake names and fake IDs. In fact, these account managers are just relentlessly selling sales guys who want to lure more and more money out of their customers. For this they receive commissions. The more money they lure out of their clients the more commission they earn. In the schemes’ lingo, these account managers are also called “Retention Managers“. Their task is to ensure that customers lose as much money as possible and receive no payouts. The money of the customers (traders) is used among other things, to fund new marketing campaigns for the acquisition of new customers/customers/traders.

In the XTraderFX scheme, the boiler rooms involved are coordinated by E&G BULGARIA. Besides the Israeli Gal BARAK, the Bulgarian Marina ANDREEVA is also active there. In addition to the two, other Israelis such as Kfir LEVY, Itzik GILLET, or Chen GANON are active in the management of the company.

Misappropriation Of Trader Funds

Use of funds in illegal broker schemes
Misappropriation of trader funds

It is important to understand that illegal brokers such as XTraderFX do not trade in the first place. They are just an illegal casinos and the so-called trades are a sort of gambling. The trades are not passed on to stock exchanges or registered brokers. In fact, the traders “gamble” or “bet” against the house as in casinos. In this respect, the illegal broker is always the opponent of the dealer and never ever their partner or friend. If the trader (customer) loses, the broker wins and vice versa. Hence, it’s in the very best interest of the broker and its people to see traders lose as much as possible the shortest possible time frame. Those retention managers claim to be representing the interests of traders when, in fact, they are only pursuing the interest of the broker. Hence, the U.S. prosecutors are charging those guys of false statements and material omissions. End of story.

U.S. versus Lee ELBAZ (Court Docket No.: 18-cr-00157)

The files of the various investigating authorities show that the broker’s software is typically manipulated and the already extremely small chances of a trader (customer) to win are therefore atomized. In the event that the customer wins in the first place, the retention manager pushes him to place new bets (trades) until he has lost all the money. Payouts are virtually non-existent. If there are payouts, then only to win the customer’s confidence and induce him to deposit even larger amounts. The files of U.S. indictments against illegal brokers show tons of internal emails that proves these procedures. Interested readers should have a look into the U.S. vs. Lee ELBAZ indictment, for example.

The funds (deposits) paid in by the traders (customers) are not kept in segregated and insured accounts as required by law. These funds are used to fund new marketing campaigns to attract additional customers and victims. In addition, customer funds are used to finance the boiler rooms operation as well as the high commissions for managers and employees. Ultimately, a significant portion of the money goes into the private pockets of the operators of these illegal broker sites.

Collusion And Money Laundering

In our interviews with many insiders of the scene, it was revealed to us that the high marketing costs are also part of the systematic money laundering of the stolen funds. Every network manager involved knows about it and gets his share of the cake. They are colluding to defraud retail investors and launder the illicit proceeds from this criminal undertaking.

The money is laundered via a complex scheme of companies over multiple jurisdictions and bank accounts under the most diverse titles. In the case of the illegal broker network of Gal BARAK and E&G BULGARIA, most of the beneficial owners of the various companies are Israeli citizens. Much of the money actually ends up in Israel with innovative companies that put their creativity, technology, and resources at the service of these illegal networks. On arrival in Israel, however, the money is already washed and booked as “marketing”, “license” or “service” revenues.

Although many offshore shell companies are involved in the schemes, the beneficial owners are just a few. In many cases, they hold different accounts for their different shell companies with the same banks.

Collusion to defraud retail investors

The actual money movements take place via only a few banks where these offshore companies have their accounts. In the case of E&G BULGARIA by Gal BARAK and Marina ANDREEVA, the funds are collected and distributed via the Bulgarian Invest Bank. The KYC/AML checks of this Bulgarian bank are evidently carried out so negligently that the money can be fed into the European SEPA system via this EU bank. Once in the SEPA system, it’s easy to transfer it to any other bank on this planet.

File Your Claim

Illegally operating broker sites are part of fast-growing global cybercrime activities. Millions of investors are defrauded by those broker sites losing billions of euros every year. Hence, it is important to warn investors of such illicit sites. If you are a victim of an illegally operating broker site such as XTraderFX, SafeMarkets, or Golden Markets, please file your claim and report activities with our EFRI campaign: